Aussie dollar climbing, euro tanks on Draghi

The energy markets and the currency markets provide the biggest stories for today, even with major financial markets (stock & bond futures) somewhat subdued before the big Non-farm payrolls number tomorrow morning at 7:30CST. In the ECB meeting this morning, European Central Bank President Mario Draghi said weak activity is expected to continue in Eurozone economies. With that said, the DEC12 E-mini S&P 500 is still up slightly on the day thus far, trading at 1411, or up .23%.

The U.S. bond futures are up alongside the E-mini S&P 500, trading up .27%. Anyone trying to pick a long term top in the U.S. bond market has likely been met with frustration over the past several years. We hear chatter of a bond market bubble. And no one rings a bell at the top. But, we need to get through the budget/tax discussions successfully before the stock market can really get some legs to a rally, thus potentially causing a slide in bond prices. If anything, we have heard a lot of discussion about how to plan for a potential massive sell off in JGBs, or Japanese Government Bonds.

The big stories today though are in energy and currency markets. In the energy markets, crude oil is really feeling the effects of increased supply. Front month crude (JAN13) is trading down $1.76 today, and is approaching our first key target of $82. We think it could head lower from there as well. RBOB Gasoline also has had a fairly strong selloff over the past few sessions, and we look for this down move to continue. JAN13 RBOB gasoline is trading down 3.3 cents at $2.605. Our next key downside levels are $2.54 and then $2.44.

In currency news, the two biggest stories today are the Euro and the Aussie dollar. The Euro is having a lot of selling today after the ECB meeting. Even though rates were held steady, Draghi seemed to open the door for future rate cuts, thus the Euro sold off a lot, now trading at 129.69, or down 109 ticks. The Aussie dollar is doing the opposite, trading up 42 ticks today, and breaching 1.05 to the upside. Our technical first upside target for the Aussie dollar futures is 1.0575.

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About the Author

Anthony Lazzara, CEO of Newport Beach, Calif., commodities investment firm Lido Isle Advisors, spent 10 years as a trader and floor broker at the Chicago Board of Trade and Chicago Mercantile Exchange. Anthony has significant experience in the energy, fixed income, and equity futures markets. After being a long-time independent futures trader, Anthony saw a tremendous opportunity to educate investors on how to invest in professional traders. Anthony is now focused on his duty as CEO of Lido Isle Advisors.